Office Real Estate in Transition – Guest Lecture at TU Munich
- Gunnar Gombert STRATEGY CONSULTING
- Oct 28
- 3 min read
As part of the course “Real Estate Markets and Investors” taught by Prof. Dr. Gunnar Gombert at the Technical University of Munich, a guest lecture on the German and Munich office real estate markets took place. Matthias Hofmann, Head of Office Agency Munich and Head of Regional Branch Management Germany at Cushman & Wakefield, provided a clear overview of current market developments, user trends, investment perspectives and structural challenges.
The lecture made one point very clear: the office market is not in decline, but in a phase of transformation and repositioning.
Market Environment: Stabilisation with Recovery in Sight
Matthias Hofmann began by outlining the macroeconomic environment:
2025 is considered a transition year, with stronger economic growth expected from 2026 onwards.
The interest rate environment is stabilising, gradually improving financing conditions and investment sentiment.
Market confidence is returning: sentiment across most asset classes has improved, especially in residential and office.
The result: Market participants are regaining confidence, and both transaction and financing activities are picking up – selectively and with a risk-aware approach.
German Office Markets: Moderate Demand, Signs of Bottoming Out
On a national level, the office leasing market shows cautious recovery:
Take-up remains below the long-term average, but the trough appears to have been reached.
Vacancy continues to rise, driven by new completions, space reductions and handbacks within hybrid work models.
Office yields are now significantly more attractive than in previous years, creating selective entry opportunities.
Key trend: Less space per employee – but higher quality requirements.
Munich in the Spotlight: Quality Over Quantity
The Munich office market presents a mixed picture:
Office take-up has declined again, while vacancy continues to rise noticeably.
Prime rents are increasing further, while average rents show a more uneven pattern.
Demand focuses strongly on ESG-compliant, modern and well-connected office space.
The dominant trend is “flight to quality”: Companies invest in higher-quality workplaces to strengthen efficiency, attractiveness and employer branding. Secondary locations face stronger pricing pressure, while suburban areas remain highly price-sensitive and diverse in performance.
User Behaviour: Flexibility, ESG and Efficiency in Focus
Corporate space strategies are shifting:
Tenants now have greater negotiation power, driving more attractive incentive packages.
Companies optimise space for flexibility, hybrid concepts and efficiency.
ESG requirements have become a key decision criterion – for compliance as well as culture and talent attraction.
In short: Quality beats quantity.
Investment Market: Selective, More International, and Opportunity-Driven
The Munich office investment market is evolving:
Transaction volume remains subdued, with capital deploying cautiously and selectively.
International investors have significantly increased their share in the market.
Price discovery remains challenging and the bid-ask spread persists, though it is narrowing.
Opportunities exist primarily for long-term investors with a clear quality and ESG focus, and for value-add strategies where transformation capabilities are essential.
Conclusion
The guest lecture underscored that the office market is not shrinking in relevance, but changing in nature. Demand is shifting towards:
less space,
higher quality,
stronger sustainability and user orientation.
Munich remains a robust yet highly selective market, where product quality, ESG compliance and location are the key differentiating factors. For students and professionals alike, the developments provide valuable insights into how office real estate will be positioned in the future.
About the Speaker
Matthias Hofmann has been with Cushman & Wakefield since 2012. He leads the Office Agency business in Munich and oversees regional branch management across Germany. He advises national and international companies on location and workplace strategies.
